Did the Housing Market Hit Bottom?
After several years of booming construction, sales and increases in home prices, the housing market did a 180° turn from 2009 to 2011, and falling values, historically low interest rates and increasing foreclosure activity became the norm. But has the end of the toughest housing market in decades finally reached its end?
Of course, the answer depends on whom you ask. Economic experts are always making predictions. Based on indicators such as unemployment rates, factory productivity, retail merchant sales, construction spending, and of course, new residential sales and construction, they can predict what 2012 will bring in the housing market.
According to several economists, the market should begin to pick up in 2012, especially if jobs start growing again. Europe’s debt problems are an unknown, and could even tip the economy back into a recession, according to an economist with IHS Global Insight. Otherwise, the economy should grow at a rate of about 1.6%.
Prices should continue to decrease through 2012, as foreclosures begin to ramp up and distressed properties flood the market. Lower prices hurt sellers, but homebuyers could likely benefit from low-priced properties through the end of 2012.
Another economist, from the National Association of Home Builders, predicts that home construction will not return to “normal” levels until 2015, due to widespread job uncertainty. In 2012, builders are expected to to construct only about 40% of the units needed to keep up with population growth. By 2013, that rate should increase to about 60% of normal. The U.S. population grows by about 3 million a year, so the housing market needs about 1.5 million new homes per year. But builders won’t ramp up to that level until mid-2013, o4 2014, according to the IHS Global Insight economist.
Multifamily construction, however, is on the rise, in response to a high demand for rental housing. Millions of Americans abandoned homeownership and turned to renting, as the homeownership rate dropped from 2004’s 69.2% to 66.3% in the third quarter of 2011.
Did we hit bottom? Probably. Economists are saying that while the housing market should begin to see some activity in 2012, a significant rebound is not likely this year.
February 16th, 2012 at
Hello News,
Cool Post, On April 8, 2009, Bloomberg.com reported that "mortgage applications in the U.S. rose last week to the highest level in three months," and that wasn't just people trying to refinance their homes. With the brutal housing market correction abruptly bringing home prices downwards, as well as a high number of foreclosure homes on the market, home prices in many areas are well within the grasp of buyers. First time buyers and those who have avoided taking on too much debt and thus have some financial flexibility are among those benefiting from current market conditions.
Keep up the good work